UAE Carrier Plans To Maximize Open Skies Agreements

Emirates is already the largest international airline, and until now its competitors could rest assured that it would compete only on city-pairs that could sensibly be offered through a stop at the Dubai hub. But not any more.

President Tim Clark has revealed the first details of what looks like the next step in Emirates' march to become a truly global powerhouse. On the sidelines of last week's International Air Transport Association (IATA) annual general meeting in Cape Town, the airline outlined plans to set up a major transpacific operation. Its aircraft would be flying through intermediate points in Asia to destinations in North America. What is making the threat even more serious for Asian and U.S. airlines is that Emirates has another 67 AirbusA380s on firm order, which—like its large incoming fleet of Boeing 777-300ERs—has the range capability to fly from many points in Asia to cities far beyond the U.S. West Coast.

Emirates can choose from several geographic points that offer the necessary aeropolitical framework. The United Arab Emirates (UAE) has an open skies agreement with the U.S. “It allows us to take passengers on a fifth-freedom basis from the West Coast and central points in the U.S. to points in Asia,” Clark says. In Asia, there are open skies agreements with Thailand and Singapore. Emirates also has similar rights for some destinations in Japan.

The plan “doesn't change the aspirations of the model, which have morphed into being a truly global airline. And the last piece of the jigsaw is the [transpacific],” Clark says.

He declines to disclose which market will be the first in the venture. Because of the shorter distances involved, the plan does not rely on the availability of longer-range aircraft such as the proposed Boeing 777-8X.

Emirates has already made one attempt at broaching the long-haul one-stop mode by opening a Dubai-Hamburg-New York route, but that ended quickly. “The timing probably was not right,” Clark concedes. The airline is about to open a Milan-New York flight that is an extension of one of the Dubai-Milan flights using 55 777-300ERs. Because of the high demand of the North Italian business community and the retrenchment of Alitalia's long-haul flying out of Milan, Emirates sees this as being more viable than its earlier try.

The transpacific operation would complement the link with Qantas, which also has significant exposure on the Australia-North America market, although the Emirates initiative would be geared more toward Southeast Asia or North Asia-to-North America flying, which would not compete with the Qantas network to the East.

The expansion of Emirates' non-Dubai network comes as the airline is battling with increased limitations at its Dubai International Airport hub. Earlier predictions saw the airport reaching 90 million passengers in 2020, but with the UAE economy and Emirates' growth beginning to rebound more quickly than anticipated following the 2008 financial downturn, the airport is now expected to reach that number by the end of 2016, four years earlier than predicted.

According to Clark, market demand is not as much of a limiting factor for Emirates' growth at its home base as are the hub's physical constraints. General aviation operations and some cargo flying, including Emirates' own, are moving to the new Djebel Ali airport and some low-cost carriers, such as Wizzair, are using the new field, taking some pressure off Dubai. Clark anticipates that some of the Indian airlines that do not depend on connections in Dubai might be willing to move as well.

On the other hand, it is not only Emirates' own growth (18% more traffic in April) that is adding to the complexity of operations at the airport, low-fare airline FlyDubai is also requesting more slots.

Another issue affecting growth in the next 18 months is the A380 wing rib-feet repairs. Emirates has just entered the cycle of permanent repairs for the in-service fleet, and currently has two aircraft grounded with three more soon to follow. Clark says Airbus has been late starting the program because the selected MRO providers were not ready. Also, he has noticed that the A380 delivery stream “has slowed down” and some aircraft are several weeks late.

Airbus has been reducing the pace of production and plans to deliver only 25 A380s this year to allow for the wing-related changes to be implemented.

Clark hopes that the wing repairs will take only 40-45 days, as opposed to the 56 that have been predicted. The repair program is slated to be completed by the end of November 2014.

In spite of the disruptions, Clark remains bullish about the capabilities of the aircraft: “[The A380's] profitability is astounding. People go out of their way to fly it.”